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Elliott Kernohan: Legal counsel, Betfair.com

22 August 2007 23:04

MONEYWEB: In the country is the legal council for betfair.com, Elliott Kernohan, who joins us now. Elliott, why are you taking such a keen interest in the online gambling regulations here?

ELLIOTT KERNOHAN: Evening, Alec. Well, from our point of view it's pretty straightforward because it's the public that parliament is really looking to protect at this stage. And if you're going to protect the public who, as you quite rightly say, are already demonstrating quite a demand to participate recreationally in all range of gambling activities online, you want to make sure that the protections that you provide are adequate, that they're enforceable, that they're able to be policed properly, and that they apply uniformly right across the spectrum of gambling that people want to participate in.

MONEYWEB: From what you've seen at the portfolio committee hearings so far, is it in line with what one does have in regulations elsewhere in the world, particularly maybe your home base of the UK?

ELLIOTT KERNOHAN: Yeah, I think the dti and the National Gambling Board have gone to great lengths over the last couple of years to really research the way that gambling has been regulated elsewhere around the world, and they haven't leapt into it. They've done their work pretty carefully and they've constructed quite a sensible and, if I may say, by global standards, quite a responsible - quite a high level of compliance is being required. And I think what we would like to see is those same good standards apply universally right across the range of Internet gambling activities that are currently available to South Africans who seek them out.

MONEYWEB: But if Derek says there's no probity of directors, there's no investigation of the companies behind them, isn't that a big hole?

ELLIOTT KERNOHAN: Well, I mean, this is exactly the point of regulation and licensing. If you don't have a regulatory framework that you can enforce, all of those holes do exist. And I think the very point of this legislation and the reason why it's so important to South Africa, if it wants to protect the players, is to ensure that it provides for licence providers. And as part of that licensing process, you know, they must ensure that they meet the standards of probity, that all of the necessary empowerment objectives are met, if not exceeded ...

MONEYWEB: But that's not in the regulations as proposed just yet?

ELLIOTT KERNOHAN: Well, frankly, from an international perspective I wouldn't expect it to be, because in the way that the current legislation is structured, all of those things form part of the licensing process which, as Derek says, is managed at the moment on a provincial basis, at a provincial level.

MONEYWEB: All right, so that's not a problem. Betfair is very big internationally - we see your adverts in the cricket tests and so on and you're a massive betting exchange. Why have you not done what Piggs Peak have done, and come into South Africa anyway?

ELLIOTT KERNOHAN: That's not the way that we do things, Alec. It's much more important for Betfair as an organisation to ensure that we're able to say to our players, look, we provide the standards of probity and protection and safeguards against problem gambling that you would expect to have in your home country. So where there is a country that takes the view that gambling should be regulated safely, we very much prefer to come in the front door, rather than be characterised and perceived as some of these other operators are. And, you know, in fairness you can't necessarily point the finger solely at Piggs Peak, who themselves would take the view that they're operating perfectly legitimately from a jurisdiction that's granted them a licence.

MONEYWEB: Ja, well, they've certainly gone to court. Just to close off with, Derek Auret believes that the dti must take these regulations back to the drawing board, redo them, do more research - do you agree?

ELLIOTT KERNOHAN: I do, but probably for different reasons than Derek's. I mean, Derek is focussing on some of the detail because he wants to be sure that the standards that his constituency has had to meet are applied across the board, and I think I would agree with him. But from our point of view it's slightly bigger than that. These requirements and these protections that are being sought to be provided for South African players really need to be imposed right across the online gambling space. It doesn't matter whether you're an online casino or whether it's online poker or sports betting or anything in between, it's the perceived risks of transacting through the Internet that need to be addressed, and that's what we think needs to go back to the drawing board.

MONEYWEB: Elliott Kernohan is legal counsel for betfair.com, and before him we were talking to Derek Auret, chief executive of the Casino Association of South Africa. Lots of investors in gaming stocks will be paying very careful attention to what happens in Cape Town, and to the aftermath of the investigations of the Portfolio Committee on Trade & Industry.